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Buying & Owning a Home Life in Savannah Savannah Market

What We Love About Savannah (for Buyers)

WHAT WE LOVE ABOUT SAVANNAH

for buyers
living in savannah georgia

We get an average of two calls a week from people who are interested in Savannah real estate, sometimes from other countries. Our team loves living and investing in Savannah. Why are so many people so bullish on this city? Where will Savannah real estate be in ten years? Savannah has TONS to offer, but the answer to this question boils down to one thing: growth. 

What we love about Savannah is it’s a growth market that most people haven’t caught on to (at least not yet). You can still get property at some astounding value here, and there is a lot of growth yet to come that should drive appreciation in excess of national trends.

DRIVERS OF GROWTH

1. TOURISM

living in savannah georgia

Tourism is the most obvious industry that folks tend to think about when they think of Savannah.  Many buyers get their first introduction to Savannah as tourists, fall in love with the city, and subsequently decide to move here.  

As of 2019, Savannah attracted an estimated 14.8 million visitors, generating $3.1 billion in spending, which amounts to about 15% of Savannah’s total GDP. This is a stunning statistic when you consider that the current population is 398,000. That’s over 37 tourists to every resident.

A large part of what makes Savannah such a big tourist town is how easy it is to get here. Savannah currently has direct flights to 27 airports, including ones in DC, Boston, Chicago, Cincinnati, Dallas, Denver, Detroit, Grand Rapids, Houston, Louisville, Miami, Minneapolis, New York, Philadelphia, and Pittsburgh. Savannah International also has regular flights to major hubs like Atlanta and Charlotte, meaning most cities in the United States are only a one-stop flight away. The average non-stop ticket fare is $279.

2. PORT OF SAVANNAH

living in savannah georgia

Let’s dive into some cool stats about the port!

– 4.6 million TEUs went through Savannah’s port in 2020, and as of September 2021 4.1 million TEUs have been through.  This represents a 60% growth since 2010’s 2.8 million TEUs.

– In FY 2021, the port added an additional 210k TEUs of capacity

– The US Army Corps of Engineers $2 Billion harbor expansion will wrap up in December of 2021. This expansion will push the depth at high tide to 54 feet, which will allow vessels in the 16k TEU range to call on the port. This means that Savannah can accept the Neo-Panamax class of ships – any ship that can currently fit through the Panama Canal can call on the port of Savannah

– A $220 million Mega Rail project is almost complete, which will increase rail lift capacity to 2 million TEUs per year

– The port of Savannah handled 9.3% of US containerized imports and 10.5% of exports in FY 2020

The best part?  Plans are already in motion that will double the throughput of the port to 9 million TEUs by 2030.

3. POPULATION GROWTH

living in savannnah georgia

According to the Us Census Bureau in 2020, the expected 10-year growth rate in the Savannah HMA is 14%, which is double the annual rate for the US. This means an addition of roughly 1,850 households annually. Much of this growth is expected along the main travel arteries – including Pooler and Richmond Hill – which makes sense, because these are the main areas with the most new construction activity. It is difficult to build new inventory in the city of Savannah itself because the city is bounded by the river on one side and salt marshes on other sides. There’s not much buildable land to build on.

4. HIGHER EDUCATION

Savannah is home to three universities: Savannah State, Georgia Southern – Armstrong Campus, and the Savannah College of Art and Design (SCAD). SCAD is the biggest player and has a major impact on the economy and Savannah real estate in general.

SCAD’s campus is spread out throughout the roughly 2-square-mile area encompassing the downtown historic district, Victorian district, and Streetcar district, and owns roughly 130 buildings. Since its founding in the 1970s, SCAD has grown to a current enrollment of roughly 14,000 students.

The impact SCAD has on the local economy and culture is undeniable. These kids (or, their parents more accurately) have money, and they spend it. They will spend good money for a good apartment, and they spend money on food and drink.  

SCAD is also a major player in the redevelopment of run down buildings and neighborhoods. If you happen to own a property near a place that SCAD buys to redevelop, you just hit the jackpot. Most recently, they purchased the rundown Chatham apartments for nearly $39 million dollars and are undertaking a total renovation of the building to turn it into student housing.

SCAD brings a lot of culture to the town, being an internationally-renowned art school. A lot of these students end up sticking around and some of them start successful small businesses. SCAD also ties in nicely with the blossoming local movie/TV industry.

5. MAJOR EMPLOYERS

Savannah has a diverse economy. In addition to a robust tourism industry that generates 27,000 jobs, Savannah is home to other major employers such as Gulfstream Aerospace (8000 employees), Memorial and St. Joseph’s health systems (8100 employees), the universities (3800 employees) and Fort Stewart/Hunter Army Airfield which are home to tens of thousands of soldiers.

6. DESIRABILITY AS A WFH DESTINATION

Working from home is not exactly a new concept, but its adoption has been rapidly sped up due to the COVID-19 pandemic. Savannah is a desirable work-from-home destination for a multitude of reasons, including the low cost of living compared to larger cities like NYC or even Atlanta, beautiful and quaint city streets, and easy access to Tybee beach and many major cities as discussed earlier when we discussed the airport.

There’s also just a lot of great food and fun things to do in Savannah! Check out this interactive map showing some of our own favorite places and things to do: 

And check out this blog post to see more reasons why young professionals are moving to Savannah, as well as a list of our favorite up-and-coming neighborhoods in Savannah.

7. DESIRABILITY AS A RETIREMENT DESTINATION

Some of the same things that make this a great work-from-home destination also make this a great retirement destination. Also, the region’s best hospitals are both minutes from downtown Savannah, and, in addition to this, there has been robust development of senior living units.

Savannah in national rankings

Still aren’t sure? You don’t have to take our word for it. Here are some cool examples of the recognition Savannah’s gotten as a place to travel to and live in:

TIME Magazine’s 2021 Greatest Places in the World list (Alphabetically organized)

Travel and Leisure’s #3 best cities in the US

Forbes Best Places to Retire (Alphabetically organized)

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Buying & Owning a Home Investing Real Estate History Savannah Market

Why We Aren’t In a Real Estate Bubble

WHY WE AREN'T IN A REAL ESTATE BUBBLE

living in savannah georgia

Have you ever seen The Big Short? If not, stop what you’re doing and go watch it.  

If you have, you know the part where Steve Carell’s character, Mark, walks out of a mortgage lending convention and calls up his trading team back in New York to tell them to start buying credit default swaps. He & his team end up buying $500M of credit default swaps after Mark solidifies his fears that banks were mass-buying risky loans with little to no true oversight or regulation. Essentially, he knew the risky loans were going to ruin the entire market before anyone else was really even aware, and therefore decided to bet against those loans for pennies on the dollar so he could get a huge payout after the crash. (https://www.youtube.com/watch?v=ECmh0M-aHPg)

The thing is, everyone always wants history to repeat itself, and humans are naturally predisposed to see patterns in everything.  Sometimes that pattern-seeking behavior helps us, sometimes not so much. In the case of the housing market in 2021, a lot of folks want to think, “Housing prices are high. Last time housing prices were high, there was a big crash. Therefore, there’s a big crash coming.” If we look deeper into the causes of the 2007-2008 great financial crisis (GFC), we will see that this market is very different.

So, what blew up the housing market back then? In short: bad loans, bad lending practices, and too much development. The bad loans were adjustable rate mortgages, and the bad lending practices were that basically anyone with a pulse could get a loan back then. This worked well for a lot of people, until it didn’t. And when it didn’t work anymore, the ensuing collapse of the housing market and mass default of mortgages almost brought down the entire world’s financial system with it.

What is an adjustable rate mortgage and why is it bad?

An adjustable rate mortgage (ARM) is exactly what it sounds like: a mortgage where the rate can adjust. Most mortgages that people take out are at a fixed rate over a thirty year term, but some people take out ARMs. An ARM typically has a lower interest rate for the first 1-5 years, then, for the remainder of the term, the rate will typically increase and fluctuate based on some benchmark rate, like the ten-year US treasury. As the benchmark rate goes up or down, so does the rate of the mortgage.  

An ARM can sometimes be a good thing to get, like when you are pretty certain you’ll end up selling the home before your low teaser rate expires (and hopefully end up selling for more, as is typically the case because the U.S. housing market over the last 80 years has gotten more expensive almost every year).

A lot of people were doing this in the mid-2000s as the housing market skyrocketed. They would get a loan on a low-rate ARM, thinking they would sell in a year or two for a handsome profit.  

As a result, ARM products became very popular in the 2000s and many of the loans saw their low teaser rate expire in 2006-2008 – just as the wider economy was slowing down and the housing market was beginning to collapse.

Source: LPS Applied Analytics and Freddie Mac, https://www.frbsf.org/economic-research/publications/economic-letter/2012/november/housing-boom-mortgage-choices/

This was obviously pretty bad timing for a large number of folks who were betting on being able to get out of their ARMs before the teaser rate expired. Folks who intended to sell were not able to do so, and folks who intended to refinance into 30 year fixed rate mortgages were also unable to do so as their houses were unable to appraise as they became less valuable. Many folks were unable to come up with enough money to pay the higher rates and simply walked away from their homes.  

What about bad lending practices?

The widespread use of ARMs does not fully account for the problem. ARMs in and of themselves are not bad; a well-qualified buyer should be able to cover the higher payment that results from the expiration of the teaser rate. The problem in the mid-2000s is that many of these buyers were simply not qualified to purchase a house.

If you’ve bought a house since the GFC, you probably know what a pain in the ass it is to get a mortgage. Your lender would have asked you for bank statements, tax returns, may have asked you to explain large transactions in your bank accounts, etc. They do all of this to make sure that you are actually capable of making payments on the loan that they are going to give you.  This is a good thing!

Back then, many banks simply were not doing this. Buyers were getting loans without being made to prove any of the income or asset declarations they made on their loan applications.  The practice became so prevalent that it even got the name, the NINJA loan: No Income, No Job, No Assets. This wasn’t a problem during the teaser rate period of an ARM mortgage, but as soon as the rate increased many of these borrowers immediately defaulted on their payments.

The Mortgage Bankers Association (MBA) puts together a system of tracking how easily buyers can get credit to purchase homes, which is called the Mortgage Credit Availability Index (MCAI).  In October of 2006, this index hit a peak of about 900. (The index currently sits at 125.)

https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index 

How could they afford to do this?

You may be thinking to yourself, “Wouldn’t it be prudent for the banks to make sure that their borrowers can repay the loans?” Yes, it would be – if the bank intended to keep the loan on their books. But they sold these loans to other, larger institutions like pension funds, investment banks, & Fannie Mae & Freddie Mac. So once these loans were off the bank’s books, there was no more risk (for the bank). These big players were not diligently inspecting the loans that they were buying. There is a LOT more to it than this – for more detail, you can always watch Margot Robbie explain it.

So what does all this mean?

You don’t have to be an economist to know that the price of any item in any market is driven by supply and demand. Lending practices in the mid-2000s caused a massive increase in demand as millions of buyers who would not normally have been able to buy a home suddenly entered the market.  

So far, we’ve touched on the demand side of the equation. Let’s take a look at supply. The chart below shows single family homes that are permitted for construction going back to 1960.

You can see that there’s lots of natural variability, but that, for the most part, the average is about 1,000,000 units started each month, and almost never more than 1,400,000 until about 2002. Houses started then began to rise all the way to a peak of 1,800,000 in 2006, before falling off a cliff at the start of the financial crisis before most economists even knew what was happening.

Builders were building more homes to meet demand for new homes, naturally. But much of this demand was artificial demand fueled by these bad lending practices. When the music stopped and the bottom fell out, suddenly there were too many damn houses! Check out that graph after the recession officially ended in late 2009 – it took ten whole years for housing starts to crawl back up to the long term average of 1,000,000!

Why is today different?

First, almost nobody is getting ARMs. Why would you, when you can get a 30 year fixed at 3%?  Not much else to say there; the ARM is essentially dead for the time being.

Second, mortgage bankers are properly underwriting loans. Remember that Mortgage Credit Availability Index we talked about earlier? Go take another quick look at that. Don’t believe me?  Apply for a loan yourself and see how many documents your lender makes you turn in! By and large, only qualified borrowers are getting loans, and they’re getting them at fixed rates, meaning their payments won’t increase.  

Third, supply. Remember the housing starts chart a few paragraphs ago? Take another look – the oversupply of homes that we had in 2006 has all been consumed by the market and then some. We now have an undersupply of new homes. So many builders went bankrupt in 2006 that it really has taken the better part of a decade for that industry to recover, and in that time, the millennial generation has started to enter their prime home buying years.

The chart below shows what’s known as “months of inventory”.

In a balanced housing market, there should be about six months of inventory on the market. Currently, across the entire US Housing market, there are just over 6 months of inventory – this number was below 4 months at the peak of the COVID-related supply crunch.  

In the Savannah market specifically, months of inventory is around 2 months at the moment. Savannah is still very much suffering from lack of inventory, and local price increases over the last 2 years have been driven largely by this lack of supply.  

What does all this lead me to believe?

  1. Increases in housing prices have not been driven by bad lending, and are more likely a result of a lack of supply.
  2. As supply catches up with demand, it is likely that the rate of growth in housing prices will slow down to more typical historic levels of about 3% price growth per year nationally.
  3. I believe that Savannah in particular will see higher than average price growth due largely to the fact that Savannah has been and will continue to experience more population growth than the larger United States.  For more information on this, check out another blog here.

Actions speak louder than words though, so here’s what actions I’ve been taking: I’ve more than doubled my personal Savannah area real estate holdings in 2021. Could I be wrong about all of this? Maybe – but I have enough conviction in my beliefs that I’m willing to bet a substantial amount of money that I’m right.

Written by: Pat Wilver

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Buying & Owning a Home Investing Loans & Financing Savannah Market

Why Investing in Real Estate is a Great Decision

WHY INVESTING IN REAL ESTATE IS SO GREAT

for beginner real estate investors
realtor savannah ga

There are thousands of different ways to invest money, but I believe that investing in real estate is the surest way for someone to find financial freedom and create generational wealth. There are quite a few reasons, but they mainly deal with 3 core concepts: leverage, necessity/utility, and tax mitigation.

1. Leverage means that we can use debt to buy real estate. Often this debt is at a very low interest rate that is fixed over a 30 year term, making it safe debt to have, unlike your credit card.  

Leverage is the most powerful thing about investing in real estate, here’s why:

Let’s say you want to buy $100,000 in a company’s stock. Typically, this will be done in an all-cash transaction.  $100,000 in cash will get you $100,000 in stock. Simple.

You can use leverage to buy stock. This is called buying on “margin”. The problem with margin is that if the value of your stock goes down, your margin lender can require you to send in more cash in what’s called a “margin call”. Basically, let’s say you use $50,000 to buy $100,000 in stock, using a margin loan for the other $50,000.  If the value of your stock goes down to say, $80,000, your lender can say “hey asshole, pay me $20,000 by 5:00 PM today or I sell some of the stock in your account.”  With real estate, your mortgage lender cannot call your note due, even if the value of your house drops by 99%.  As long as you continue to make payments on time, the house is still yours.  

Anyway, back to the example. We bought $100,000 in stock straight cash, because we don’t want to mess with a risky margin loan. Let’s say that a year later, our stock is 10% more valuable, making our investment $110,000. Awesome – we made $10k! Let’s also say that this stock was paying a dividend yield of 1.5%, which is pretty typical. This means that they also paid us dividends equal to $1,500. Great – our investment is worth $111,500! Cool – that’s a 11.5% return on investment. Pretty good for a year!

Now, let’s apply that same example to a real estate investment, and let’s look at the power of leverage. Let’s say it’s a $100k house. Typically, you’ll be able to get a mortgage loan for 20% of the purchase price, so we need to come to the table with $20k. Factoring in closing costs, that’ll be about $25k. So we buy a $100k house for $25k in cash, taking out an $80k loan for the rest.

Let’s say that our house appreciates the same 10%, making it worth $110k at the end of a year.  Let’s also assume that our tenant paid enough rent to cover all expenses, and on top of that we were able to cash flow $2k on the year – not bad!  Let’s also assume that we paid down $3k worth of the loan balance over the course of the year.  So that makes our total gains on the year equal to $15k.

Here’s the fun part – you might be thinking that our return on investment is 15%, since the house cost $100k – but our investment was actually only $25k.  We made $15k on a $25k investment, which makes our return on investment a whopping 60%! Incredible!

Now of course, leverage works both ways: just as leverage amplifies our gains, it amplifies our losses. This is why it’s important to make sure that we can collect enough rent to cover our mortgage payments, and then some. Time heals all wounds in real estate, and even folks who bought a rental in 2005 are now sitting pretty if they’ve been able to hold onto the house through the housing crisis back in 2007-08. The only way to hold through the bad times is to make sure that the property can be rented. This ties into the necessity principle.

2. Necessity or utility means that people need a place to live. Shelter is right up there with water, food, and air. As long as people prefer sleeping in a house over the cold hard ground, they will be willing to pay for it.

This is pretty simple: everyone needs a place to live. The principle of necessity does not mean that you can never make a bad real estate investment. Far from it. What it does mean is that the value of real estate will never go to zero. Whereas a company can go bankrupt and the value of your stock goes to zero, real estate will always be worth something. Furthermore, people will always be willing to rent it (unless you never make any repairs). Rent is relatively inelastic, meaning that the prices do not typically fluctuate wildly. And they almost never go down more than 10%, even during a bad recession.  

Now, catastrophic local events can have a serious impact on values and rental rates. A town that is anchored by one major employer will see rental rates and real estate values collapse if that employer leaves, for example.  

3. Tax mitigation means that owning real estate provides some great tax-reduction benefits that we can use to lower our tax bill.

The tax benefits to owning real estate are huge. When you own a rental, all expenses can be written off your income, which is nice. The biggest thing about owning a rental is depreciation – let’s talk about it.

You know how when you buy a new car and drive it off the lot it’s instantly worth less? That’s depreciation. Got it? Good.

We can also depreciate real estate on our taxes, regardless if the house actually becomes worth less or notWhat does this mean? Basically, the IRS tax code says that, every year, we can deduct from our taxes an amount equal to 1/27th of the purchase price of the home. So that home we bought for $100k depreciates $2,700 each year in the eyes of the tax man (even though we know the house actually worth more now than it was when we bought it)! We can take that $2,700 and deduct it from our taxes. You remember that $3k of profit that we made from our rent? We can wipe out all but $300 of that on our taxes and only pay income tax on that $300. How cool is that!

Now, the flip side of that is a nasty little thing known as depreciation recapture. Say we sell that house 10 years down the line, after depreciating it a total of $27,000. The IRS is now going to want us to pay capital gains tax on that $27,000, in addition to whatever additional profit we made. That stings, but there are ways to avoid it. The first is never selling until we die, and then our kids can step-up the cost basis of the house when they inherit it (unless we died incredibly wealthy, which would be a great problem for our kids to have).

The other way is what’s called a 1031 exchange, which is a cool little tax trick where you can sell your rental and turn around and buy one that is at least $1 more expensive. You will then roll all of those capital gains that you would have had to pay tax on into your new rental. Then, just keep doing 1031 exchanges until you die and boom! Now your kids can deal with that shit!

And here’s one of my favorites. Say you want to take a trip to California. Great. Now, let’s say you’re interested in checking out some deals out there, or just getting to know the real estate market. All you have to do is set up an afternoon to tour around with a real estate agent and look at properties and boom – now it’s a business trip! You can write off your flights and you can write off hotel and meals for the day or days that you actually do real estate investing-related activities. Can’t write anything off your stock gains just by looking at the New York Stock Exchange! There are some other cool tax strategies, but way too many to list out. It’s best to know your situation and chat with someone who knows more, and to do your own research.

Other benefits

Leverage, necessity, & tax benefits all go a long way to explaining why I love real estate investing, but let’s hash out one more crucial thing: cash flow.

When we talked about leverage, we saw that our rental property was bringing in $3000 each year of cash flow after all expenses were paid. This $3000 accounts for about 12% of our initial investment of $25k. This 12% is what’s known as our “cash on cash” return, and can be compared to dividend yield on a stock. 12% is an incredible number to get on a rental property, and this means that in a little over 8 years, our rental income will have paid us back the $25k we initially invested (assuming you keep the rents the same, but in reality, you’ll probably raise rent). 

Here’s the cool part: if we’re diligent, we can save that cash flow to apply to a new purchase.

Let’s say it took us three years of saving to save up the $25k to buy that rental, and let’s assume that we continue to make the same exact salary from our job, and save at the same rate. That means we saved about $8,300 each year. Now, if we add on that $3k in cash flow from our rental, we are saving $11.5k each year, which means that we would have saved enough for the next rental after only 2.2 years instead of 3.

Then, we add another rental, making us an additional $3k each year. Now we’ve saved the $25k in only 1.7 years, and we buy another. In 1.4 years we’ve saved enough for another rental, then it takes 1.2 years, then 1 year, then .9 years. The more rentals we buy, the faster we can buy more. Ownership of rental properties snowballs, and as you build more income and learn more about investing, you will be able to turn your growth exponentially.

Written by: Pat Wilver

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Savannah Market

November’s Market Update

[av_section min_height='' min_height_pc='25' min_height_px='500px' padding='default' margin='' custom_margin='0px' color='main_color' background='bg_color' custom_bg='' background_gradient_color1='' background_gradient_color2='' background_gradient_direction='vertical' src='' attach='scroll' position='top left' repeat='no-repeat' video='' video_ratio='16:9' video_mobile_disabled='' overlay_enable='' overlay_opacity='0.5' overlay_color='' overlay_pattern='' overlay_custom_pattern='' shadow='no-border-styling' bottom_border='no-border-styling' bottom_border_diagonal_color='#333333' bottom_border_diagonal_direction='' bottom_border_style='' scroll_down='' custom_arrow_bg='' av-desktop-hide='' av-medium-hide='' av-small-hide='' av-mini-hide='' id='' custom_class='' template_class='' aria_label='' av_element_hidden_in_editor='0' av_uid='' sc_version='1.0'] [av_textblock size='' av-medium-font-size='' av-small-font-size='' av-mini-font-size='' font_color='' color='' id='' custom_class='' template_class='' av_uid='av-kx4w4k6j' sc_version='1.0' admin_preview_bg=''] Happy December! Between the holidays, some extra family time, & our usual day-to-day chaos, we have been busy! (Can you relate?) We did, however, make sure to carve out some time to look into Savannah’s real estate trends for November. Based on our research, it seems more people have been buying homes to settle into just in time for the holidays. In other words, the market is still hot!

General Market Trends

For the month of November in the entire Savannah MLS, which covers all of Chatham, Effingham, Bryan, & parts of Long and Liberty Counties, we have seen the following:
  • 1,044 new listings, as opposed to 974 new listings in October & 947 new listings this time last year (in November 2020)
  • 972 properties sold, as opposed to 1,028 sold in October & 856 sold November 2020
There are currently 1,555 homes on the market (compared to 884 in October), for a total of 1.5 months of inventory. In a balanced market, we expect to see 6 months of inventory, so we are still in a seller’s market. Here, we can see the trends from the last 5 years of months of inventory (in blue - remember, the balanced market is right around 6 months) & median home sale prices (in green). And this chart shows us the trends, also over the last 5 years, of the amount of new listings (green) & sold houses (blue). Here is our index of neighborhoods:
  1. Ardsley Park/Chatham Crescent/Baldwin Park/Parkside
  2. The Islands
  3. Historic Districts
  4. Starland/Thomas Square/South Victorian District
  5. Eastside
  6. Pine Gardens/Savannah Gardens/Avondale “The States”/Victory Heights
  7. LaRoche/Fernwood/Glynnwood/Savannah State/Skidaway Terrace/Magnolia Park/Thunderbolt
  8. West Savannah
  9. Cloverdale/Tremont Park/Liberty City
  10. Cuyler Brownsville/Cann Park
  11. Midtwon
  12. Southside
  13. Georgetown/Chevis/Little Neck
  14. The Landings/Isle of Hope/Dutch Island/Burnside Island
  15. Berwick/Southbridge
  16. Garden City/Old Port Wentworth
  17. New Port Wentworth/North Pooler
  18. Pooler/Bloomingdale
  19. Rincon
  20. Guyton/Springfield
  21. Richmond Hill
  22. Keller
  23. Midway
  24. Hinesville

1. Ardsley Park/Chatham Crescent/Baldwin Park/Parkside

  • 23 new listings
    • 16 new listings in October 2021
    • 16 new listings this time last year (November 2020)
  • 23 properties sold
  • Average sale price: $395,000

2. The Islands

  • 52 new listings
    • 46 new listings in October 2021
    • 80 new listings this time last year (November 2020)
  • 69 properties sold
  • Average sale price: $508,000

3. Historic District

  • 28 new listings
    • 20 new listings in October 2021
    • 29 new listings this time last year (November 2020)
  • 26 properties sold
  • Average sale price: $847,000

4. Starland/Thomas Square/South Victorian District

  • 23 new listings
    • 13 new listings in October 2021
    • 16 new listings this time last year (November 2020)
  • 21 properties sold
  • Average sale price: $573,000

5. Eastside

  • 18 new listings
    • 22 new listings in October 2021
    • 7 new listings this time last year (November 2020)
  • 13 property sold
  • Average sale price: $209,000

6. Pine Gardens/Savannah Gardens/Avondale “The States”/Victory Heights

  • 20 new listings
    • 21 new listings in October 2021
    • 15 new listings this time last year (November 2020)
  • 14 properties sold
  • Average sale price: $215,000

7. LaRoche/Fernwood/Glynnwood/Savannah State/Skidaway Terrace/Magnolia Park/Thunderbolt

  • 30 new listings
    • 38 new listings in October 2021
    • 21 new listings this time last year (November 2020)
  • 24 properties sold
  • Average sale price: $273,000

8. West Savannah

  • 3 new listings
    • 4 new listings in October 2021
    • 21 new listings this time last year (November 2020)
  • 5 properties sold
  • Average sale price: $91,000

9. Cloverdale/Tremont Park/Liberty City

  • 11 new listings
    • 8 new listings in October 2021
    • 7 new listings this time last year (November 2020)
  • 5 properties sold
  • Average sale price: $114,000

10. Cuyler Brownsville/Cann Park

  • 8 new listings
    • 8 new listings in October 2021
    • 8 new listings this time last year (November 2020)
  • 7 properties sold
  • Average sale price: $119,000

11. Midtown

  • 26 new listings
    • 22 new listings in October 2021
    • 28 new listings this time last year (November 2020)
  • 4 properties sold
  • Average sale price: $288,000

12. Southside

  • 55 new listings
    • 64 new listings in October 2021
    • 43 new listings this time last year (November 2020)
  • 52 properties sold
  • Average sale price: $309,000

13. Georgetown/Chevis/Little Neck

  • 40 new listings
    • 50 new listings in October 2021
    • 49 new listings this time last year (November 2020)
  • 51 properties sold
  • Average sale price: $262,000

14. The Landings, Isle of Hope, Dutch Island, Burnside Island

  • 27 new listings
    • 42 new listings in October 2021
    • 42 new listings this time last year (November 2020)
  • 35 properties sold
  • Average sale price: $808,000

15. Berwick/Southbridge

  • 28 new listings
    • 34 new listings in September 2021
    • 39 new listings this time last year (October 2020)
  • 36 properties sold
  • Average sale price: $315,000

16. Garden City/Old Port Wentworth

  • 7 new listings
    • 13 new listings in October 2021
    • 9 new listings this time last year (November 2020)
  • 12 properties sold
  • Average sale price: $173,000

17. New Port Wentworth/North Pooler

  • 35 new listings
    • 31 new listings in October 2021
    • 32 new listings this time last year (November 2020)
  • 39 properties sold
  • Average sale price: $287,000

18. Pooler/Bloomingdale

  • 67 new listings
    • 73 new listings in October 2021
    • 89 new listings this time last year (October 2020)
  • 64 properties sold
  • Average sale price: $303,000

19. Rincon

  • 67 new listings
    • 42 new listings in October 2021
    • 69 new listings this time last year (November 2020)
  • 68 properties sold
  • Average sale price: $281,000

20. Guyton/Springfield

  • 86 new listings
    • 42 new listings in October 2021
    • 44 new listings this time last year (November 2020)
  • 54 properties sold
  • Average sale price: $257,000

21. Richmond Hill

  • 56 new listings
    • 67 new listings in October 2021
    • 54 new listings this time last year (November 2020)
  • 56 properties sold
  • Average sale price: $332,000

22. Keller

  • 47 new listings
    • 41 new listings in October 2021
    • 37 new listings this time last year (November 2020)
  • 45 properties sold
  • Average sale price: $421,000

23. Midway

  • 29 new listings
    • 73 new listings in October 2021
    • 66 new listings this time last year (November 2020)
  • 58 properties sold

24. Hinesville

  • 64 new listings
    • 73 new listings in October 2021
    • 66 new listings this time last year (November 2020)
  • 58 properties sold
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Categories
Buying & Owning a Home Savannah Market

Ways to Win in Multiple-Offer Situations

WAYS TO WIN

as a buyer in a multiple-offers situation
sell my home savannah

We are currently in one of the strongest sellers’ markets in ages and it’s tough to win a deal.  On average, there is a 6-month supply of houses on the market. As of December 2021, there’s about 2 months in the Savannah area, compared to 6 months nationally. There are a few reasons for this, one being so many homebuilders went bankrupt in 2008 that we haven’t been building enough houses for our growing population. But that’s not what I’m writing to you about right now. What I want to discuss is HOW to win in competitive markets like this one.

Many buyers tend to focus on price only, but there are so many other levers a buyer can pull to make their offer stand out without necessarily having the highest price in their offer. In any real estate transaction, there are dozens of variables that can make your offer either more or less competitive in the mind of the seller – and every seller is different and has different needs!

Let’s discuss each variable and discuss how we can use each one to make our offer stronger.

1. Price

Price is typically the most important thing in the mind of a seller. Your price must be competitive, but the price you offer doesn’t necessarily have to be the highest. Here’s the bottom line: if a seller lists a house for $400k, and you can prove that the house is objectively worth about $400k by looking at the comparable sales, then you will not win a bidding war if you toss in a low-ball offer. Yes, even if you are buying cash, have proof of funds, can close tomorrow, etc.

But what if a house is obviously listed too high? Say that house is only worth $300k? It’s not wrong to offer what you think it is worth, but unless a house has been on the market for a long time, it’s very rare for a seller to come that far off their asking price, even if there are no competing offers. That doesn’t mean you shouldn’t try! Just manage your expectations.  Remember, real estate is a very personal transaction for most people, and sometimes a person’s opinion of worth isn’t always tied to what the numbers say.  

What if a house is obviously listed for too low? Say that $400k house is worth $500k? Then you should offer what it is worth, especially if there are a lot of solid comps and you have a good amount of certainty that it is really worth that much more. Because if you can see that, so can the other bidders.  

2. Due Diligence/Inspection period

This is a great way to make your offer stand out and can really help you beat higher priced offers. 2 years ago, it used to be typical to get 14 days of due diligence to inspect a home. Now, I advise my clients to offer 7-10 days (or sometimes less if I can get one of my inspectors lined up on short notice). It’s not terribly uncommon to offer no due diligence period, but proceed with caution if you choose that route.

Side note: just because you don’t have a due diligence period doesn’t mean you can’t still do an inspection. You can, and you can terminate the transaction without fear of getting sued (at least in Georgia – not every state is this way.)  The only thing you will lose is your earnest money deposit, which we will discuss next!

3. Earnest Money

It is standard practice to offer an earnest money deposit equal to 1% of the purchase price. If you have the ability to do 2 or 3%, it will greatly increase your chances of winning. This deposit is applied to your down payment, is fully refundable during your due diligence period for any reason, and is refundable for certain circumstances after due diligence period that I will discuss later in this post. If the seller defaults on the contract (meaning they do not fulfill their obligations), then it is also refundable.

4. Option Payment

An option payment is a non-refundable payment that you make to the seller.  This money is non-refundable for any reason other than the default of the seller. Typically, I do not advise my clients to make an option payment, but if a listing has multiple offers, I sometimes advise my buyers to offer $250-750 as an option payment depending on the situation. Not many buyers are willing to offer up an option payment, so it could really help to prove to the seller that you are serious and do not intend to haggle with them over trivial issues that might come up in an inspection.

5. Loan related contingencies

It is standard to ask for a financing and appraisal contingency.  A financing contingency allows you to get your earnest money refunded if you get a loan denial, and the appraisal contingency allows you to get it refunded if the house doesn’t appraise for the purchase price.  

Typically, before the market went nuts, we would ask for a 21-day financing contingency and a 25-day appraisal. Now, I typically offer 18-day financing and 21-day appraisal.  We can sometimes shorten these periods if we know and trust the lender. A good lender will be able to tell you exactly how tight we can make these contingencies while still covering our bases. They should know how long appraisals are taking, and we can pay extra to rush the appraisal if needed.  

If you really want to win and think that your price might not be up to snuff, you can completely waive these contingencies. I’ve done it before, just know that your earnest money will not be protected. It’s a bit of a roll of the dice, but sometimes it may be worth it.  

6. Strength of loan pre-approval

The strongest pre-approval will always come from a respected local lender. Listing agents know who the good lenders are, and they like to work with lenders that they know and trust to do the job. A preapproval from a big national bank just does not carry the same weight as one from a good local lender.

Another way to make your offer really stand out is to get your loan underwritten before even putting in an offer. This means that the lender has already completely underwritten you as a buyer, which is a process that they typically only do once you have a property under contract.  Not all lenders are willing to do this and I don’t often advise clients to do it, but I have done it before and it does help. It also allows you to not even have a financing contingency and still feel confident.

7. Appraisal gap

Another good way to stand out without completely risking your deposit by waiving your appraisal contingency is to offer an appraisal gap. An appraisal gap basically says “if the appraisal comes in low, I promise to pay up to X amount of dollars to cover the difference. So if you offer $400k, and it appraises for $390k, and you make a promise to cover a difference up to $5k, you will be required to come out-of-pocket up to an extra $5k of the total $10k difference.  If the seller insists you cover the entire difference, then you can terminate and get your deposit back. If they offer to reduce the price by $5k, then you must do what you promised to do and come up with the other $5k, or you will lose your earnest money deposit.

8. Closing costs

You can ask the seller to cover some of your closing costs. Before the sellers’ market got hot, it was common for buyers to get the seller to pay a few thousand dollars in closing costs. It’s not very common anymore, and I do not recommend asking for the seller to pay any of these costs if you are in a competitive bidding situation. In the Hinesville market, it is still somewhat common, but less so. In 2019, a VA buyer could typically expect to get a seller to pay $4-7k in closing costs. Now less than $3k is more standard, if at all.

Typically you can expect to pay anywhere between $6-12k in closing costs, depending on your purchase price. The higher the purchase price, the higher the closing costs.

9. Cash is king

All this talk about loans leaves out the biggest winner – cash. If you offer cash with proof of funds up front and no appraisal contingency, that’s about as strong as it gets. Cash deals also allow us to close faster, which sellers generally like. The typical financed transaction can close no faster than 30 days, but a cash deal can close in as little as 10.  

10. Closing time frame and seller rent-backs

Speaking of a cash deal being able to close quickly, sometimes a seller would prefer that closing takes longer! Maybe they need time to find a new house, or want the profits of the sale to be in next year’s tax return. This is why it’s important for your agent to speak with the seller’s agent and ask them: “what does your seller need and want? What can my buyer put in their offer to make it stand out?” This is something all Trophy Point Realty agents are trained to do.

Cool story – recently, I had a buyer who kept striking out on offer after offer.  Finally, we found a great house and decided that this was going to be the one. I asked the listing agent what the seller needed, and she told me they needed to be able to stay in the house for a month or two after closing. You see, the seller needed to get that house off his credit report before he could get a loan to buy his next one, but in this market, it’s very difficult to get an offer accepted if it is contingent on the sale of another property. We told them “no problem, how does a full price offer with a 30-day seller rent-back after closing sound?”  We won the deal and everyone was happy, and we even did it without them calling for highest and best, saving my client money. Win-win!

Every property and every seller is different, and the strategy you and your agent will want to employ will be different every time.  At the end of the day, it is your money, and your future home.  I always recommend to my clients that they make an offer that they will be able to sleep at night whether they win or lose – there’s nothing worse than buyer’s remorse, except for the remorse of losing a home you really loved because you didn’t put your best foot forward when drafting your offer.

 

Written by: Pat Wilver

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Categories
Investing Life in Savannah Savannah Market

What We Love About Savannah (for Investors)

WHY WE LOVE SAVANNAH

for investors
Savannah real estate group

I get an average of two calls a week from investors, sometimes from other countries, who are interested in plowing some of their cash into Savannah real estate. I invest most of my own money here. Why are so many people so bullish on this city? Where will Savannah real estate be in ten years? In this blog, I’ll try to answer some of those questions, but it boils down to one thing – growth.

Why do investors pay much higher earnings multiples to own tech stocks than they do, say, an automaker? Because of the expectation of a ton of future growth. You see a similar thing in hot real estate markets and desirable locations, as cap rates will typically be much lower in Manhattan than Des Moins, Iowa.  

What I love about Savannah is it’s a growth market that most people haven’t caught on to, at least not yet. You can still get into plenty of cash-flowing properties here, and there is a lot of growth yet to come that should drive appreciation in excess of national trends. 

DRIVERS OF GROWTH

Savannah has a great mix of industries ranging from logistics, manufacturing, healthcare, education, and of course, tourism. Let’s dive into some of these industries and discuss where they’ve been and where they’re going.

1. Tourism

Tourism is the most obvious industry that folks tend to think about when they think of Savannah. Many investors get their first introduction to Savannah as tourists and subsequently decide to invest here.  

As of 2019, Savannah attracted an estimated 14.8 million visitors, generating $3.1 billion in spending, which amounts to about 15% of Savannah’s total GDP. This is a stunning statistic when you consider that the current population is 398,000. That’s over 37 tourists to every resident.

A large part of what makes Savannah such a big tourist town is how easy it is to get here. Savannah currently has direct flights to 27 airports, including DC, Boston, Chicago, Cincinnati, Dallas, Denver, Detroit, Grand Rapids, Houston, Louisville, Miami, Minneapolis, New York, Philadelphia, and Pittsburgh. There are regular flights to major hubs like Atlanta and Charlotte, meaning most cities in the United States are only a one-stop flight away. The average non-stop ticket fare is $279.

2. Port of Savannah

Take a guess – where does the Port of Savannah rank against other container ports in the US? Maybe the 10th or 15th busiest? Try 3rd busiest. Only Long Beach and LA push through more Twenty-Foot Equivalent Units (TEUs, the unit of measure used for shipping containers).  (https://gaports.com/wp-content/uploads/2021/10/Monthly-TEU-Throughput-September-2021.pdf?1637097075)

Let’s dive into some cool stats about the port!

  • 4.6 million TEUs went through Savannah’s port in 2020, and as of September 2021 4.1 million TEUs have been through. This represents a 60% growth since 2010’s 2.8 million TEUs.
  • In FY 2021, the port added an additional 210k TEUs of capacity.
  • The US Army Corps of Engineers $2 billion harbor expansion will wrap up in December of 2021. This expansion will push the depth at high tide to 54 feet, which will allow vessels in the 16k TEU range to call on the port. This means that Savannah can accept the Neo-Panamax class of ships – any ship that can currently fit through the Panama Canal can call on the port of Savannah.
  • A $220 million Mega Rail project is almost complete, which will increase rail lift capacity to 2 million TEUs per year.
  • The port of Savannah handled 9.3% of US containerized imports and 10.5% of exports in FY 2020.

The best part? Plans are already in motion that will double the throughput of the port to 9 million TEUs by 2030.

3. Population Growth

According to the Us Census Bureau in 2020, the expected 10-year growth rate in the Savannah HMA is 14%, which is double the annual rate for the US. This means an addition of roughly 1,850 households annually. Much of this growth is expected along the main travel arteries – including Pooler and Richmond Hill – which makes sense, because these are the main areas with the most new construction activity. It is difficult to build new inventory in the city of Savannah itself because the city is bounded by the river on one side and salt marshes on other sides. There’s not much buildable land to build on.

4. Rental Trends

Savannah’s average monthly apartment rent is $985/mo, up from $725/mo in 2010 (Q3 2020, HUD), and the overall average rent is $1350/mo (Aug 2021, rentcafe). Rents remained steady during the 2008 GFC, though vacancy then did jump to 10% during 2009-2010.  

Looking outside the official data, there have been a lot of luxury apartment buildings constructed since 2018.  Properties like Park + BroadEastern Wharf, and The Mata Dora are offering upscale units with the best amenities, and their average one bedroom rent ranges from $1750/mo at Park+Broad to as high as $3,200/mo in the highest-end one-bedroom units at the Mata Dora. Two-bed units range from an average of $2,500/mo at Park+Broad to $2,900/mo at the Mata Dora. Typically, an investor renting out a unit in a 1-4 unit building will not achieve quite those numbers, given that those luxury units come with amenities. But it is possible to get damn close if you present a well-renovated and designed unit with off-street parking in a desirable location like the downtown Historic district or Starland/Thomas Square.

We anticipate that these rental rates will continue to increase in the desirable locations near downtown where neighborhoods are very walkable due to one main fact: the only new inventory coming on the market is in redevelopment of existing structures or renovations. There is no new land to build on.  

5. Higher Education

Savannah is home to three universities: Savannah State, Georgia Southern – Armstrong Campus, and the Savannah College of Art and Design (SCAD). SCAD is the biggest player and has a major impact on the economy and Savannah real estate in general.

SCAD’s campus is spread out throughout the roughly 2-square-mile area encompassing the downtown historic district, Victorian district, and Streetcar district, and owns roughly 130 buildings. Since its founding in the 1970s, SCAD has grown to a current enrollment of roughly 14,000 students paying a tuition of $52,000/yr.  

The impact SCAD has on the local economy is basically threefold. First, the tuition is so damn high that you know these kids (or, their parents more accurately) are paid. They have money, and they spend it. They will spend good money for a good apartment, and they spend money on food and drink. Typically they make good tenants.  

Second, SCAD is a major player in the redevelopment of run-down buildings and neighborhoods. If you happen to own a property near a place that SCAD buys to redevelop, you just hit the jackpot. Most recently, they purchased the rundown Chatham apartments for nearly $39 million dollars and are undertaking a total renovation of the building to turn it into student housing. And student housing is stupid expensive, like, $9k per student per year in their triple occupancy dorm rooms up to $15,434 per year for single-occupancy rooms.

Third, SCAD brings a lot of culture to the town, being an internationally-renowned art school. A lot of these students end up sticking around and some of them start successful small businesses. SCAD also ties in nicely with the blossoming local movie/TV industry.

6. Major Employers

Savannah has a diverse economy. In addition to a robust tourism industry that generates 27,000 jobs, Savannah is home to major employers: Gulfstream Aerospace (8000 employees), Memorial and St. Joseph’s health systems (8100 employees), the universities (3800 employees), and Fort Stewart/Hunter Army Airfield (home to tens of thousands of soldiers).  

7. Desirability as a WFH destination

Working from home is not exactly a new concept, but its adoption has obviously rapidly increased due to the COVID-19 pandemic. Savannah is a desirable work-from-home destination for a multitude of reasons, including the low cost of living compared to larger cities like NYC or even Atlanta, beautiful and quaint city streets, and easy access to many major cities (as discussed earlier when we discussed the airport).

There’s also just a lot of great food and fun things to do in Savannah! Check out this interactive map showing some of my own favorite places and things to do:  

 
 

8. Desirability as a retirement destination

Some of the same things that make this a great work-from-home destination also make this a great retirement destination. Also, the region’s best hospitals are both minutes from downtown Savannah, and, in addition to this, there has been robust development of senior living units, including an opportunity zone fund that is currently leasing units near Waters and Wheaton

Savannah in national rankings

Still aren’t sure? You don’t have to take our word for it. Here are some cool examples of the recognition Savannah’s gotten as a place to travel to and live in:

TIME Magazine’s 2021 Greatest Places in the World list (Alphabetically organized)

Travel and Leisure’s #3 best cities in the US

Forbes Best Places to Retire (Alphabetically organized)

Written by: Pat Wilver

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Categories
Buying & Owning a Home Rentals Savannah Market

To Buy or To Rent?

TO BUY OR RENT

making the best decision for you clear
realtors in savannah ga

Deciding to buy or rent takes a lot of thought, and there isn’t a one-size-fits-all answer for everyone. You must weigh your options, consider the pros and cons of buying or renting, and decide the best course of action for you in the stage of life that you’re currently in.

Of course, as a real estate agent, I have an economic interest in convincing you to buy a house. I will try to set that aside as I write this blog and give you the objective facts. And the truth is, I also own a lot of rental properties – so I also have an economic interest in folks deciding to rent as well! Maybe I can be impartial here, and no matter what you decide to do, my team and I would love to help you find a great home to buy or rent. 

Let’s discuss renting first – there are some benefits for sure. The biggest one is that you’re not on the hook for major repairs that come up. In addition to that…

  • It’s pretty easy to apply for a rental, whereas buying a house typically takes 1-3 months and can involve many hours of your time.
  • Renting provides flexibility.  When you want to leave, just don’t renew your lease.
  • If you know you will only be living in an area for a short period of time, it might not make financial sense to buy because of the costs involved in selling a home. The break-even point on buying a house usually falls between 12 and 24 months of ownership. You can find more information on calculating the rent vs own math at our blog post here.
  • If you’ll be moving to an area where real estate does not transact frequently (typically a rural area), or an area where the net population is decreasing (which would place downward pressure on real estate prices), it may be better to rent unless you know with a high degree of certainty that you will be staying in the home for quite some time. Renting in this circumstance could pose less risk than owning.
  • What if you had to place the property up for rent when you move, and the market rent is less than your mortgage payment? You may never want to be a landlord, but knowing that you can rent the property and at least cover your mortgage payments is an additional layer of safety in your investment. If you don’t have that layer of safety, you may want to consider renting instead of buying, ESPECIALLY if you are fairly certain that you will only occupy the property for 1-3 years. 
  • Finally, you may want to consider renting if your credit score is below 650 or you do not have enough savings to cover a large expense, like an air conditioner.  

Now, what are the cons to renting?  There are a few:

  • First, you’re paying your landlord’s mortgage instead of your own.  What’s worse is that typically your landlord’s mortgage payment will be lower than your rent.  Let’s say your rent is $1500.  Chances are that $400 of that will go towards paying down your landlord’s loan, $400 towards their interest payment, $300 to taxes and insurance, $100 to a property manager, $100 to maintenance, leaving $600 left over that goes straight to his or her pocket.  
  • Your landlord’s house is probably also appreciating at an average rate of 3% per year.
  • Unlike a mortgage payment which is fixed, rents tend to increase over time.
  • You don’t have permanence. At the end of your lease term, your landlord can ask you to move. You won’t have any say in this, and if you try to fight it, your landlord will almost certainly win in court (at least in Georgia).
  • Don’t like something about the house? Maybe the color of the walls? You need your landlord’s permission to do anything about it.
  • Your landlord might not prioritize your maintenance requests. Many landlords are cheap, inattentive, or just lazy.  

Next let’s take a look at some cons of buying a home, and also explore ways that we can mitigate these risks.

  • You are now on the hook for any repairs. Air conditioning went out? Could be a $200 capacitor, could be that you need an entirely new system at a cost of $5-7k.  
    • We can mitigate the risks of having huge expenses in a few ways. First, doing a diligent inspection of the home before we purchase it and using that inspection to anticipate what major repairs are coming up. Second, we can purchase a home warranty, usually at a cost of $600/yr. Third, we can save up the money that we save every month (by having a mortgage payment lower than our would-be rent) and keeping that cash available for when the major repair comes up.
  • You might have a major life change shortly after buying your home, making another move necessary. As discussed, the break-even point in home ownership is typically between 12-24 months, so a sale shortly after buying could result in a net loss.
    • This can be mitigated by being able to break even on renting the home.  
    • Additionally, breaking a lease early can be costly as well. Early termination fees typically run between $2-5k.
  • You end up buying a home in a neighborhood you don’t like.
    • This can be mitigated by conducting extensive research before buying a home. It might not be bad to rent for a short period of time when moving to a new city as a way to get a feel for the area. 
    • I also highly recommend visiting a home you wish to buy at different times of day.  One evening, go for a walk in the neighborhood. Study commute times at different times of day. Are there train tracks nearby? An airport? Does the neighbor introduce himself during your showing and seem like a weird dude? He’ll probably be weirder once you actually move in! These are questions that you should ask yourself.
  • What if I can’t sell the home when I need to? What if I overpay?
    • The best way to mitigate this is to have a good agent who understands how to value a home. They should run some comps for you before making an offer so you know you’re submitting an offer that is in an acceptable range. Also beware of buying the nicest, biggest house on the block – it’s typically a better investment to have a dumpy house on a nice block than a nice house on a dumpy block. You can always make a dumpy house nice, but I’ve found it to be exceedingly difficult to convince your neighbors to do the same!
    • It can also be a bit of a risk buying a home in a development that is in the early stages of development, for two reasons. First, your house will not appreciate very much while other new houses are being built, because why would a buyer want to buy your two year old house when they can get a new one down the street? Second, what if the developer goes bankrupt and never finishes the development?
  • What about natural disasters like hurricanes and floods?
    • These disasters are a fact of life in coastal Georgia. We mitigate them in a few ways. First, we try to avoid buying in flood zones when possible – it’s easy to check if you’re in a flood zone or not – check out our blog post on it! Second, we make sure that our home is properly insured, including flood insurance when needed.  

We’ve talked about the bad. Now, what about the good? Most of these are basically the inverse of the cons of renting:

  • Every month, when you make your mortgage payment, some of that money goes towards paying down the mortgage. When you do this, it’s like putting money into a piggy bank – the piggy bank being home equity!
  • Nobody can make you move, or tell you what color to paint the walls in your own home!
  • Mortgage payments don’t go up, and are almost always going to be lower than the rent you would pay for the exact same home, especially in the Savannah area.
  • Interest rates are currently at historic lows and unlikely to stay this low for long. The lower the interest rate, the more purchasing power you have, meaning you can buy a more expensive home with a lower interest rate and have the same monthly payment than a cheaper home with a higher rate.
  • If you do decide to keep the house after you move, a rental home can be a great source of passive income. Over the years, I have built up my rental portfolio to the point where I get close to $4k each month in passive income from it – and many of these properties were once primary residences that I decided to hold on to! I am a firm believer that owning rental properties is the surest way to financial freedom, though it will not make you rich overnight!

I hope this post has been informative and will help to guide your decision to rent or buy a home in the Savannah, GA area! For more information, please check out any of the other blogs I linked, or reach out to us with whatever questions you may have!

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Categories
Life in Savannah Savannah Market

5 Reasons Young People are Moving to Savannah, GA

5 REASONS YOUNG PEOPLE ARE MOVING TO SAVANNAH, GA

(With a BONUS list of our favorite neighborhoods!)

Trophy Point Realty Group

Savannah, Georgia.

The big city with small-town charm. Considered the “Hostess City of the South”, our revered town is flourishing with successful small businesses, elevated dining scenes, antebellum low-country living – the list goes on & on! We’ve racked up some impressive accolades from TIMES “World’s 100 Greatest Places of 2021” to Travel + Leisure’s Top 25 Best Distilleries In the U.S. to back our beloved city & we just keep outdoing ourselves! Whether it be getting away from the hustle & bustle of a fast-paced metropolis, or to seize the opportunity of affordable urban living, or even to find a glass of proper sweet tea – here’s why out-of-staters are arriving in herds to Savannah.

1. it's great for young professionals!

Stating the obvious first. The volume of the world-renowned art institute, SCAD, has echoed throughout the quaint streets of Savannah for the past few decades. The school’s rise in enrollment has offered us a youthful spin to counteract some of our traditional customs in the most harmonious way. With hopeful students & young professionals filling the downtown scene, there is always a vibrant environment that keeps our city exciting!

living in savannah georgia
living in savannah georgia

2. urban revival

There has been an influx of new, exciting redevelopment, including our revitalized Plant Riverside District. There are ever-growing incentives from the city & multiple nonprofit organizations to preserve & repurpose our historic buildings, so there’s only more immersive activities to come!

3. southern hospitality is alive & well

Savannah has been given the honorable distinction of being the “Hostess City of the South” & for good reason. We have stayed true to our manners & it has become the foundation of our culture. Smiling at strangers is common & it’s a great way to start connecting with people. You’ll find that you have more people in your corner than you think once you get out in the community!

relocating to savannah georgia
realtors savannah

4. historical roots

Savannah is the oldest city in Georgia, so it is packed full of easter eggs around town that delight our fascination & keep us in touch with our roots. In Savannah, each country square, cobblestone street, & towering oak tree hold their own character with an enriching story to learn. Keen on preserving as much history as we can, you will feel as if you stepped into a time capsule once you arrive.

5. convenience

To pair with the enchanting strolls, Savannah has a comprehensive grid system to make the area more navigable. Our town is reasonable in size & the entire midtown to downtown area is extremely walkable & pedestrian-friendly. With bike paths lining down almost every active street, you’ll likely find that it might be easier to walk or bike to your next destination than drive.

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BONUS: tons of great, up-and-coming neighborhoods!

With development & hospitality always on the rise, there’s been more incentive to keep our neighborhoods safe & inviting.

One of those is the Starland District!

Starland/Thomas Square neighborhood was, years ago, fairly devoid of any charm or activity, but now is full of art murals, SCAD students, thriving businesses, & many of Savannah’s hottest restaurants & bars. It sits between Bull St., E Victory Dr., Price St., and E Anderson St. You can find our favorite tacos at Bull Street Taco, our favorite after-work hangout at Starland Yard (pictured), and loads of artsy stores & craft beer around that area.

living in savannah georgia
Living in savannah georgia

It’s full of artistic charm & gorgeous Victorian homes, all just a few short blocks from the downtown scene. Housing prices are great compared to downtown, & considering how much more value houses in this area provide (better parking, more house for money, quality of homes, etc.), we are one of many big fans of this neighborhood!

There’s another neighborhood we especially love, & that’s Eastside. Eastside is the next Starland District (with its own unique twists, of course), sitting between E Broad St., Wheaton St., Waters Ave., & E Anderson St. In the last five years, SCAD tenants have started moving to Eastside chasing cheaper rents. Rent & sale prices are about 35% lower than they are in the Starland district, yet all of Eastside is a 5-minute bike ride from pretty much any point in downtown Savannah, & just a few short blocks to the famous, beautiful Forsythe park. There are gorgeous, old late-Victorian homes, adorable cottages, & tree lined streets that all give this area innate residential character.

homes for sale eastside savannah
living in savannah georgia

Eastside also lies in a federal opportunity zone, & the city of Savannah has its own further incentives along Waters, which means the area is now bursting at the seams with development – both residential & commercial. There is a new, 60-unit senior-living apartment complex on Waters & Anderson called Romana Riley Lofts, & another senior-living community coming in the next few months near Cedar & Wheaton St, just on the north end of the Eastside district. Not only that, but Trophy Point Realty Group will soon be moving into an office space we purchased & are re-developing along the Waters corridor. This redevelopment will include space for a coffee shop/café tenant, & we’ve gained tons of interest in the space & support from the community even without any marketing.

living in savannah ga

ready to move?

Savannah has proven to be the hostess with the mostess – but come see for yourself! Writing pen to paper does not nearly do our town enough justice, & its inexplicable charm is meant to be experienced in person. If Savannah sounds like the right fit for you, give one of our trusted agents a call!

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Investing Savannah Market

Federal Historic Tax Credits: Taking Advantage of Them in Savannah’s Landmark Historic District

SAVANNAH, GA TAX-ADVANTAGED ZONES

part one: federal opportunity zones

When a government wants something done, they can do it one of two ways – do it themselves, or encourage private enterprise to do it. One of the ways that government inventiveness private corporations to do something is through the use of tax incentives. There are some POWERFUL tax incentives for real estate developers in the city of Savannah, so let’s talk about the first of these types of zones and how the average investor can benefit from them: Federal Opportunity Zones.

FEDERAL OPPORTUNITY ZONES

Federal Opportunity Zones (O-Zones) are a huge program that got rolled out in the Tax Cuts and Jobs Act of 2017. Investing in an o-zone allows the investor to completely avoid paying capital gains from the sale of ANY asset as long as certain conditions are met. This is a much better deal than the simple tax deferral that an investor can get from a 1031 exchange, and you can do it with non like kind assets – for example, you could sell the TSLA stock you bought at $150 (pre-split) and roll your 10x gains into an o-zone tax-free. Now, O-Zones are hard to invest in for the average investor, but it’s still critical to know where these zones are. You can bet that big players will be putting their money to work in an o-zone whenever possible, and if you can forecast where the big money might be flowing then you can ride that appreciation wave that will follow. If you’re investing in Savannah real estate and you’re not taking o-zones into account you’re ignoring a big piece of information that could help drive your investing decisions.

First, some notes on why o-zones are not really for the average investor:

  • You can’t just invest your money into an o-zone, you must invest it in a Qualified Opportunity Fund (QOF).

  • There are a ton of rules governing how a QOF must operate. A certain percentage of their total assets must be in an o-zone, for example, and they have to at least double the taxable value of property acquired inside the o-zone, funds must be held inside the QOF for at least ten years, etc etc.

  • QOFs need to get buy in from many different stakeholders: local citizens, politicians at the local and state level, and often need to fight zoning fights to do what they need to do. This induces significant legal overhead.

  • Basically, unless you’re investing/raising a significant sum of money ($10+ million), it doesn’t make sense to have all the legal and administrative overhead required to run a QOF.

BUT – that doesn’t mean that a real estate investor in Savannah can’t benefit from these zones! You know a lot of the big development going on around town? Places like Eastern Wharf, the new apartments going up by Wheaton, and the two new apartment complexes out Presidents past East Broad? All of these massive developments are happening/have happened inside o-zones and are possibly QOFs. Wouldn’t it be nice if you knew where all the opportunity zones in Savannah were so you could forecast where the next big money investments might happen?

Well, you can! Go to sagis.org/map and turn on the “Federal Opportunity Zone” layer – or check out the screenshots below. Now just because an opportunity zone exists doesn’t mean that money is just going to come pouring in – you’ll want to look for other favorable indicators for development. Favorable zoning. Undeveloped, dry land that won’t cost much to buy. Or perhaps an undeserved demographic. Like, perhaps an influx of college kids, service industry workers, and young professionals chasing cheaper rents into an area of town with no coffee shops, bars, dining, or retail within walking distance? Know anywhere like that? I do, because I live there: East-side and the Waters Ave corridor – which is all in an o-zone.

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savannah realtors

Federal Opportunity Zones aren’t the only part of the Savannah real estate tax incentive equation though, the city of Savannah has its own incentive zones that more specifically target certain areas where the city wants to see big commercial revitalization take place. Check back in a few days for a post on the City of Savannah’s Enterprise Zones!

 
 
Author: Pat Wilver

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Buying & Owning a Home Investing Savannah Market

Neighborhood Analysis: Live Oak/Baldwin Park

LIVE OAK/BALDWIN PARK

neighborhood analysis

This will be the first in a recurring series of posts where we analyze a specific area of Savannah. We will discuss relevant metrics for flippers, turnkey or BRRRR landlords, and touch on commercial development opportunities as applicable. For the uninitiated, BRRRR means buy, rehab, rent, refinance, repeat. It’s a powerful way to build wealth and avoid taxes.

First up – Live Oak and Baldwin Park!

If you’re not super familiar with Savannah, Live Oak is in the bottom right of the map below, north of Daffin Park. If you’re familiar with Savannah you’ll probably notice that I expanded the customary definition of Live Oak a bit, and that the shaded area below includes Baldwin Park and the area between Bee Road and the Truman that most people don’t think of as Live Oak. I just decided to expand the definition of Live Oak here so I can keep this series down to about ten posts in total.

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And here’s the zoomed in.

 
homes for sale in baldwin park

 

BACKGROUND INFO

The Live Oak neighborhood is an area of active revitalization located between Daffin Park/Ardsley Park and the Henry/Anderson St corridor. Almost all of the Live Oak neighborhood is economically disadvantaged and underdeveloped, which is why almost all of it falls within a federal opportunity zone. The neighborhood is historically working class and was an area where people of color were permitted to purchase homes during segregation. The Live Oak neighborhood of Savannah experiences higher levels of poverty still to this day due to the legacy of segregation, and is now experiencing the early stages of gentrification – and not without some controversy. I actually have a lengthy draft blog post about that dark history that I will link here when I finish it – you really can’t talk about Savannah real estate with out discussing segregation and red lining, but that’s a heavy topic that deserves its own post.

Methodology

If you want to learn about how I did my research, check out this section, otherwise scroll down to the conclusion.

So, I actually live north of Live Oak in the Benjamin Van Clark neighborhood – I could probably write this whole post based only on anecdotal evidence and personal experience. I will pull in some data though because here at Trophy Point Realty Group we’re big on numbers. The data that I will include is from the U.S. Census, and specifically I will pull data from census tract 27. Unfortunately the Live Oak neighborhood includes parts of four different tracts, but I feel that this tract is the most representative of the neighborhood. You will see some maps, these are built using my personal experience in the neighborhood and MLS data, where applicable.

All census data is from 2018 or earlier. Census data is thrown off because of the student population – a high student population skews the poverty level to seem higher than it actually ishttps://www.census.gov/library/stories/2018/10/off-campus-college-students-poverty.html

ECONOMIC DATA AND TRENDS

Poverty: Poverty is close to 20%, remember though that the college student population skews this number to seem higher than it actually is (since college kids don’t make any money.) This isn’t to say that there’s not poverty in Live Oak, because it certainly is. I would estimate that the poverty rate in live oak, excluding college kids, is between 10-15%.

 
homes for sale in baldwin park

Housing units vs Population: Population in census tract 27 is up about 300 people since 2012, but housing units are actually down just a bit. This puts upward pressure on rents, of course.

 
homes for sale in live oak

Household income: I’m not sure what is causing this increase in poverty that we’ve been seeing around 2015 that shows up in the chart below and the poverty level chart above. It could be an anomoly in the data, because it’s been my experience that Savannah has been on a pretty steady up and up progression since the bottom of the recession here in 2010 (with the real estate price bottom hitting in about 2012). Let’s not get too caught up on the year to year movements though and focus on the overall trends, and the trends look pretty good, but still leave much room for improvement.

Key takeaways are that most people living in Live Oak make less than $25k a year. A portion of these folks are students who show little to no income but are not living in poverty, but most are legitimately living in poverty.

We see that the percentage of households making more than $125k has more than tripled – I would estimate that most of this population is living right on Victory Drive or 42nd Street. Many of these households are also actually living in the Baldwin park neighborhood, which is a more affluent neighborhood just north of Ardsley Park/Victory drive that is centered on Atlantic Ave.

 
homes for sale in live oak

Demographics – Age: A couple of interesting trends here. First, the over 75 and the under 5 bracket of ages are trending down on a per capita basis. To me this indicates that families and legacy homeowners are making up a smaller percentage of the population in this area.

The population of 65-75 year-olds is increasing though, which indicates to me that retirees are moving into Live Oak. This matches up with my personal experience, I have a few neighbors who are retirees who wanted to move to Savannah and chose the Eastside because it’s cheap, but still close to downtown attractions.

We also see that the population of 18-35 year-olds is growing fast. Again, this lines up with my personal experience as I have seen the number of college kids and young professionals that are moving to this side of town for much of the same reasons as the cost-conscious retirees. Hell – I’m one of these people!

 
homes for sale in live oak

 

HOUSING DATA – RENTS AND SALE PRICES

The chart below pretty much speaks for itself – the price per SqFt ratio in this part of town has close to doubled in the last five years, and has outpaced appreciation in Savannah at large. On average, a 1500 SqFt house in this part of town sells for about $175k – though there is some huge variability block to block. I’ll dive into that a bit in the “neighborhood classes” section below. Months of inventory are also the lowest they’ve been since just before the last recession. Ask any agent around town and they’ll tell you the same thing: there is not enough starter home inventory in this town. A nice home listed in the high 100s/low200s in this part of town will typically sell quickly, even if it’s not on a great block (it still better be on a decent block though, pay special attention to my “neighborhood classes” section below for more information on this).

 
homes for sale in baldwin park

Rents have also been increasing briskly here, below is a chart I built from MLS rental data. MLS rental data isn’t as accurate as sale data because many rentals never get entered into the MLS, but given the sample size of 180 rented units over the 8 year study period I feel that this should be a pretty close approximation to the actual market. Right now, the average rent price per square foot is about $1, which is up from about 70 cents eight years ago. Meaning a 3 bed, 1500 SqFt unit rented for about $1,050 back in 2012, and rents for $1500 today. This is almost 4% growth in rents per year!

Now, please note that you really shouldn’t use this metric to evaluate an individual deal. The market rent per sqft is higher for single family units, and also higher for smaller units. The amount of bedrooms and quality of unit obviously play a huge role as well. I’m just trying to illustrate general trends over time here.

 
homes for sale in baldwin park

 

NEIGHBORHOOD CLASSES

Neighborhoods in Savannah are incredibly diverse, and Live Oak/East Side is no different. This map below is one that I built based on my own experience working deals and living in this area. Here’s how my color coding works:

  • Blue: areas that are already well-developed; there is not much opportunity to find fix and flip/BRRRR deals here. These are established neighborhoods. Rental properties routinely sell at or near 150x gross monthly rent (as in, you’re not going to cash flow on a rental unless you get in below market rent.)

  • Green: transitional areas. These are areas where the young professionals and college kids are starting to move into. They are >40% flipped – meaning early investors have already driven up prices a bit, but there is still opportunity to find deals. These are a pretty good bet, but you’re not likely to find killer deals unless you get lucky (because everyone else knows about these areas and wants to invest there.). You can push close to $200/ft in these areas. Turnkey rental properties routinely sell around 115-120x gross monthly rent – still able to cash flow here, especially with rates as low as they are.

  • No Color: “C+” areas. Not too great, but not bad. There has been some flipping/renovating going on, but not to the extent of the green areas. ARV for flips will often be in the low $100s per foot, or if you’re buying a rental look to be all-in at about $100x rents.

  • Orange: “C-” areas. You’re not going to be able to sell a top notch flip here for much more than $100/ft. Look to be all-in at 90x gross monthly rents or below. These are areas where about 10% of properties on any given block are blighted or in visible need of serious repair.

  • Red: “D” areas. These are pretty much good for rentals only, or flips that you can profit at an ARV around $100k. You should be all-in at 80x gross monthly rents at a max. Over 15% of properties are blighted. For experienced landlords only.

 
homes for sale in live oak

Now, here’s the disclaimers: Savannah is SO block to block, really it’s impossible to really make a map like this. This is intended for general guidance only. Same thing goes for my ARV comp data and market rent to sale price ratios – this is block to block, and really property to property as well. Please use this information in your initial deal screening, but be sure to do more due diligence before you actually decide to purchase – or give me a call!

COMMERCIAL DEVELOPMENT

There really has not been too much commercial development in the Live Oak area over the last ten years. There is a newer whole foods nearby, and a new 50-75 unit apartment building near Anderson and Waters, but the overall lack of development has been a bit disappointing. The city and federal government is pushing hard to bring in new development, and I think that as more young people with money move into the area developers will become more incentivized to build some retail and restaurant space for them to enjoy – and once those spaces are built they will attract more younger folks as a result. Check out this post to read more about the incredible tax advantages available to developers who develop real estate in this part of town!

CONCLUSION

Live Oak is on the up and up, and a lot of investors here in Savannah are pretty bullish on the area. The areas between Daffin Park and 40th St and south of Henry/Anderson to about 33rd st are actively being flipped, but the areas surrounding 37th st haven’t really caught on yet, estpecially east of Waters. Overall, the Live Oak neighborhood and the Eastside of Savannah in general is likely to continue to develop quickly as SCAD students, young professionals, and retirees chasing a lower cost of living move into the area.

I believe that as working from home catches on and becomes more permanent in the wake of COVID, Savannah will see more net immigration of young tech enabled workers looking to move out of the big and expensive north eastern cities into a town like Savannah with it’s low cost of living, gorgeous streets, history, and diversity in dining, shopping, and nightlife. Live Oak will continue to be a draw for the cost-conscious among that crowd.

Developers will begin to take advantage of Savannah’s tax advantaged zones in Live Oak as more money moves into the area, and that development in itself will draw in more money once complete. This will continue the upward pressure on rents and home prices. There was recently some demolition of a decrepit commercial building on Waters and 31st, there’s the new apartments in the old school on Waters and Anderson. I think the next big movement to really kick off growth will be when the first coffee shop/bodega space opens up along Waters, most likely between Park and 31st – at least that’s what I’d be doing if I had the money. This might also happen near Paulson and Anderson, or both. I anticipate this to happen within the next 1-2 years.

It is for these reasons that I like BRRRR deals in the Live Oak neighborhood. Why fix and sell real estate here when we believe there will be so much growth? I know that I personally would prefer to hold onto real estate here, and that is in fact what I’m doing with my own money. Of course, when it comes to single family homes it often makes more sense to flip, it all depends on the numbers!

Want to talk specifics with me about real estate investing in this part of Savannah? Shoot me an email at pat@trophypointrealty.com and I’ll get you on my calendar as soon as possible!

Author: Pat Wilver

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